Tribunal Rules Shareholder Not a Financial Creditor under IBC 2016

The Tribunal held that GVFL Trustee Company Pvt Ltd did not qualify as a Financial Creditor under the IBC 2016 as it was a shareholder, not a lender. The debt claimed by GVFL was not considered a Financial Debt under the IBC 2016 as it was an investment in shares, not a loan. The Section 7 Petition filed by GVFL against Hubtown Limited was deemed not maintainable as the rights exercised were typical shareholder rights, not those of a Financial Creditor. Consequently, the Tribunal dismissed the Company Petitions filed by GVFL under Section 7 of the IBC as not maintainable.

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Issues Involved:
1. Whether GVFL Trustee Company Pvt Ltd (GVFL) is a Financial Creditor under IBC 2016.
2. Whether the debt claimed by GVFL is a Financial Debt as per IBC 2016.
3. The maintainability of the Section 7 Petition filed by GVFL against Hubtown Limited.

Issue-wise Detailed Analysis:

1. Whether GVFL Trustee Company Pvt Ltd (GVFL) is a Financial Creditor under IBC 2016:

The Tribunal examined whether GVFL qualifies as a Financial Creditor under Section 5(7) of the IBC 2016. According to the IBC, a financial creditor is defined as "any person to whom a financial debt is owed and includes a person to whom such debt has been legally assigned or transferred." The Tribunal found that GVFL, being a shareholder, is distinct from a lender. Shareholders invest in shares and derive returns through dividends and capital gains, whereas lenders receive interest payments on loans. The Tribunal concluded that GVFL, as a shareholder, does not qualify as a Financial Creditor.

2. Whether the debt claimed by GVFL is a Financial Debt as per IBC 2016:

The Tribunal analyzed whether the debt claimed by GVFL constitutes a Financial Debt under Section 5(8) of the IBC 2016, which defines financial debt as a debt disbursed against the consideration for the time value of money. The Tribunal noted that GVFL's investment in HBT Mehsana was through the purchase of shares, which cannot be considered a loan or a disbursement against the time value of money. The Tribunal emphasized that the Internal Rate of Return (IRR) claimed by GVFL is related to expected profits and dividends, not interest payments. Therefore, the Tribunal concluded that GVFL's claim does not meet the criteria of a Financial Debt under IBC 2016.

3. The maintainability of the Section 7 Petition filed by GVFL against Hubtown Limited:

The Tribunal considered the maintainability of the Section 7 Petition filed by GVFL, which sought to exercise its "put option" under the Share Subscription and Shareholders Agreement (SHA). The Tribunal noted that the rights enjoyed by GVFL, such as voting in AGMs/EGMs and appointing a director, are typical shareholder rights and not those of a Financial Creditor. The Tribunal concluded that the share purchase by GVFL with exit options like the "Annual Put Option" cannot be considered a debt disbursed against the consideration of the time value of money. Consequently, the Tribunal held that the claim of GVFL does not qualify as a Financial Debt under IBC, and the Section 7 Petition is not maintainable.

Judgment:

The Tribunal allowed MA 2412/2019 regarding the maintainability of CP(IB)-4129/2018 and dismissed the Company Petition CP No. CP(IB)-4129/2018 under Section 7 of IBC as not maintainable. Similarly, based on the above findings, the Tribunal also allowed other MAs viz. MA 2411/2019 in CP 4128/2018, MA 2413/2019 in CP 4130/2018, and MA 2414/2019 in CP 4131/2018, and dismissed the Company Petitions No. CP(IB)-4128/2018, CP(IB)-4130/2018, and CP(IB)-4131/2018 filed under Section 7 of the IBC as not maintainable.

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